Property Tax Deferral and Addressing the 2020 Tax Rate

I have received a lot of feedback from residents since Council’s
decision on Monday to approve the 2020
property tax by-laws and allow a deferral of property tax payments until
September 30, 2020. I voted in favour of the bylaws and the deferral
program. Some of the feedback I’ve received is “how could we possibly raise
taxes right now?” Others are saying we should cancel some of our priority
capital projects to help lower the tax rate. Others are saying we should just
cancel property taxes this year. There is no doubt that individuals and
businesses are facing extreme challenges in these unprecedented times but, if
we want to move forward we have to look at the facts. Now, I don’t expect to
change the opinions of groups like the Canadian Taxpayers’ Federation, or even
some of my Council colleagues but, I want to take some time here to outline
some of the facts.

What
Council Approved and What this Means for Individuals and Businesses

Council approved an
effective 0% tax increase on the City portion for 2020. After adding in a
number of other factors that is an 11.27%
decrease for non-residential accounts and a 7.51% increase for residential accounts. That’s only an additional
$150 in 2020 for a typical residential property with a $455,000 assessment. Here’s
how we got to those numbers:

Council
approved an effective 0% increasefor 2020 by approving a 1.5% increase
and a 1.5% rebate;

Council
approved $13M to make-up for Provincial budget shortfall to the
police budget;

We shifted the ratio of property tax to 52% residential and 48% non-residential
to help address the economic challenges that businesses in our City have been
facing due to falling property values. We have about 500,000 residential accounts in the City compared to about 14,000 non-residential accounts. We
needed to make this shift to help businesses and move to a more equitable tax
distribution. It has far less impact to individual households to spread out
more of the tax burden over about 500,000 residential accounts compared to the
impact it would have on each of the only 14,000 non-residential accounts;

Council
approved a $30M municipal
non-residential phased tax program to further assist businesses that have
seen the highest tax increases.

I understand we are facing a big challenge right now, so Council
has approved additional relief
measures to support taxpayers facing financial hardship. Property tax bills
will be mailed by the end of May as usual however, two new significant relief
measures were approved to provide flexibility for taxpayers:

The tax payment deadline has been extended
from June 30 to September 30 without late payment penalties; and

The Tax Installment Payment Plan (TIPP) has suspended its
two per cent (2%) filing fee for taxpayers who join TIPP after January 1, which has been suspended until January 1, 2021. This enables
taxpayers who use The City’s monthly TIPP to cancel their monthly payments now
and rejoin the program by September 30, 2020 to meet the tax payment deadline
without administrative fees. There is no action required from
property owners to access the deferral.

Is
this a perfect solution? No. And we are continuing to explore other relief
measures that we could provide. But we need to start somewhere and work with
the facts: we need to continue to provide City services that are funded through
property taxes, the City cannot run a deficit, we need to coordinate our
efforts with other levels of government to get folks the most relief while
maintaining the services we rely on, and cancelling capital priority projects
is not the answer. I’ll explain what I mean:

The City
Cannot Run a Deficit

According
to Provincial legislation the City can’t run a deficit. Our
income and expenses have to balance every year. The City also has very limited
tools to generate revenue and property tax is the main tool. The other reality
is that the overall effects of the global
COVID-19 pandemic have put stresses on all areas of the City. Our first priority is to maintain the
wellbeing of Calgarians and to do that we need to focus our efforts on sustaining
City services that we all rely on; services like the fire department, the
police, roads, and transit. While we are adapting the ways we deliver services,
we must be aware of the revenue impacts the City is suffering. Presently
Calgary Transit has seen a 90% reduction in C- Train ridership, along with a
70% reduction in key bus route and MAX ridership. No access to recreation
centres or arts and cultural activities either. Lost revenue from closures and payment
delays of utilities are some of the ways the City is losing revenue. We are losing an estimated total $15M a
week. In the future, we can expect market volatility and economic
conditions that challenge our ability to generate revenue. By laying the
groundwork now, we can lessen the impact of the uncertainty that is to come. We
cannot run a deficit to cover these losses or to provide the services that we
rely on so we cannot simply cancel this year’s tax bills.

We Need a
Coordinated Effort

We also need to coordinate with the relief programs that other
orders of government are providing. Both the Federal and Provincial governments
are providing a range of supports to individuals and businesses and we need to
look at how the City can support an overall response while still providing the
service that we rely on. The City is continuing to advocate to other orders of
government for additional aid to vulnerable citizens, aid to businesses, aid to
municipalities, stimulative infrastructure, and long term economic resilience
and a new deal for cities.

Cancelling
Priority Capital Projects is Not the Answer

Now I am hearing some suggestions
that we pull out of some big projects; namely the Green Line, the Event Centre,
Arts Commons, the BMO Centre, and the Fieldhouse. I believe this would be a
detriment to the long-term sustainability that is vital for Calgary’s
prosperity. Firstly, cancelling these
projects won’t realize a significant tax savings today. For most of these
projects the dollars are being spent in future years. And, these projects are
being paid for from funds other than property taxes. For example, the CRL or
the MSI funds. Secondly, these projects
will have a benefit for Calgary’s economy. The Arts Common, BMO Centre and
Events Centre combined will add over an estimated $1B to Calgary’s economy.
Moving forward with the BMO Centre and Arts Commons alone would create 6000
Jobs for Calgarians, which will be crucial during the recovery from the
COVID-19 pandemic.

To desert our
commitment to these projects would be leaving a significant amount of funding
from other orders of Government on the table. We would be abandoning a
potential of about $3.7B that likely would not be injected into Calgary
otherwise.

This is a hugely difficult time for everyone and as a City
we are continuing to work on ways to bring more relief. And we need to do that
in light of the facts.